March 2, 2006

 

CBOT Corn Outlook on Thursday: Down 1/2-1 cent; poor sales; follow through

  

 

Corn futures on the Chicago Board of Trade are seen starting Thursday's session with a weak undertone, pressured by expected follow-through selling from Wednesday and lower-than-anticipated weekly export sales.

 

Analysts expect corn to open 1/2 to 1 cent per bushel lower.

 

In overnight electronic trading, March corn was 1/2 cent lower at US$2.23 3/4, and May corn was 1/4 cent lower at US$2.34 1/2 per bushel.

 

Poor weekly sales following a four-week stretch of strong sales are seen applying early pressure, with bird flu issues an underlying theme to weigh on prices, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The U.S. Department of Agriculture said 2005-06 corn weekly export sales totaled 613,500 metric tonnes, 58% below the previous week and prior four-week average. Major buyers include Japan, in for 194,700 tonnes, and Mexico, buying 121,000 tonnes. Trader expectations ranged from 800,000 to 1,200,000 tonnes.

 

Abundant cash supplies and recirculating deliveries are seen aiding the weak tone, with the spillover influence of the wheat market expected to shape price direction as well. Traders are expected to pay close attention to spreading bird flu outbreaks, awaiting signs that avian flu is moving closer to U.S. shores.

 

Meanwhile, higher outside markets, with firm crude oil and metals markets may provide mild support.

 

Technical analysts said the market still has some upside technical momentum. But a close below last week's low of US$2.30 would provide the bears with some fresh downside technical momentum.

 

First resistance for May corn is seen at US$2.38--Wednesday's high--and then at US$2.39 3/4-this week's high--and then at US$2.41. First support is seen at US$2.34--Wednesday's low--and then at US$2.32.

 

In deliveries, a total of 1,391 delivery notices recirculated against the March future. The primary issuer was a customer account at Bear, Stearns Securities with 600 lots. Stoppers were scattered among various firms. The last date assigned was February 24.

 

Cash corn basis bids were mostly unchanged across the Midwest.

 

DTN Meteorlogix Weather Service said Argentina has a chance for showers today into tonight before outlooks turn drier. In South Africa, widespread rain and thunderstorms are on tap during the weekend and during Monday. This rainfall may mean flooding for some crop areas. Maize crops would benefit from warmer and drier Weather, Meteorlogix added.

 

In overseas markets, corn futures China's Dalian Commodity Exchange settled slightly lower on long liquidation. The combination of profit taking and bird flu outbreaks are weighing on corn prices, traders said. The benchmark September 2006 contract settled RMB8 lower to RMB1,457/tonne.

 

In news, China's vice premier on Thursday forecast possible bird flu outbreaks and more human cases during the coming spring migratory season. The prediction is based on a "comprehensive analysis," the official Xinhua News agency said. Serbia's agriculture ministry said Thursday that initial tests conducted on a wild swan found in western Serbia revealed that it had died of the H5 strain of bird flu.